Client Alerts & Newsletters

IRS Mandates Audit of Deductibility of Settlements


IRS has issued audit guidance on the deductibility of settlements under the FCA which provides for mandatory examination of settlements of $10 million or more, consideration of pre-filing agreements with settling persons, and mandatory contact with the Justice Department Fraud Section pursuant to agreed procedures. Generally, civil "penalties" imposed for the purposes of enforcing the law and as punishment for violations of the law are not deductible, but civil "penalties" imposed to encourage prompt compliance with a requirement of the law or as a remedial measure to compensate another party for expenses incurred as a result of the violation are deductible.

This message is not intended to constitute tax advice. Accordingly, this message was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding any penalties that may be imposed on such taxpayer by the Internal Revenue Service.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Brian C. Elmer
Retired Partner – Washington, D.C.

Crowell & Moring LLP is an international law firm with approximately 550 lawyers representing clients in litigation and arbitration, regulatory and policy, and transactional matters. The firm is internationally recognized for its representation of Fortune 500 companies in high-stakes litigation, as well as its ongoing commitment to pro bono service and diversity, equity and inclusion. The firm has offices in Brussels, Doha, London, Los Angeles, New York, Orange County, San Francisco, Shanghai, and Washington, D.C.

View Desktop Site | Mobile Sitemap

Contact | Subscribe | Terms of Use | Privacy Statement | Alumni

© Crowell & Moring LLP 2021
Attorney advertising - prior results do not guarantee a similar outcome.